Federal government re-examines pandemic risk insurance law – Trade Observer

A federally backed insurance program reintroduced in Congress on Tuesday could protect businesses, and by extension property owners, from the next pandemic.

Democrat Congressman Carolyn Maloney introduced a second version of its bill that would require insurers to provide coverage for infectious disease outbreaks that the federal government Ministry of Health and Social Services declares a “covered public health emergency”, according to the legislation.

The program, dubbed the Pandemic Risk Insurance Act, would be administered by the Secretary of the Treasury and calls on the government to assume 95% of insurance claims linked to the pandemic.

Businesses that see their operations disrupted by a future pandemic should be offered coverage by insurers for a portion of the fixed costs and 180-day payroll during a public health emergency where state or local governments require coverage. closure of businesses, according to the text of the bill.

The American Hospitality and Accommodation Association, New York Hotel Alliance, New York Real Estate Council (REBNY) and other hotel owner and owner groups are supporting the legislation because it could give small businesses the funds to cover rental costs during a pandemic.

“Just as the September 11 terrorist attacks revealed a critical gap in the commercial insurance market 20 years ago, the coronavirus crisis has revealed the key role insurance plays in making the real estate market work. foreground of New York City. ” James whelan, president of REBNY, said in a statement. “A newly created pandemic risk insurance program will help strengthen New York City’s economic recovery by ensuring that the impacts of any future pandemic are managed more effectively, protecting jobs and economic activity. “

A wave of owners took the court system to recover rents from tenants who stopped paying during the pandemic. Mattress company, Bed bath and beyond, New York and company, Knotel and famous chef Bobby flay‘s Bold food were all sued last year by business owners. In some cases, including gym chain Equinox and retailer Difference, the landlords won, a judge ruled that these retailers were paying off thousands to millions of dollars in rent arrears.

The bill itself is similar to the Terrorist Risk Insurance Act (TRIA), which has provided the commercial real estate industry with safety net against losses acts of terrorism since its promulgation following the September 11 attacks on World Trade Center. The public-private partnership has helped keep insurance costs low for developers, Commercial Observer reported.

But, unlike TRIA, there is no insurer deductible or post-event recovery in the new bill. Insurance Industry Group American P&C Insurance Association To opposed to legislation, claiming that this would make business interruption insurance unaffordable and make it impossible for the private market to insure against a global pandemic, Business Insurance reported.

The bill, which was first introduced in May 2020 and dragged on for months in Congress, would cover excess insurance, workers’ compensation, business disruption, commercial liability insurance and liability insurance for directors and officers, according to its text.

Celia Young can be reached at [email protected].

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